Travel insurance sector a ‘noticeable absence’ from contributory data sets

By failing to develop a market-wide contributory data set, the travel insurance sector risks falling behind other sectors in its efforts to close the disclosure gap and reduce its attractiveness as a target for fraud.

This is according to Dushane Naidoo, life actuary at Verisk, who shared his thoughts in a talk titled Numbers to Narrative – Unlocking the Insight Hidden Within Travel Insurance Data, at last week’s Verisk Insurance Conference.

Naidoo explained: “The concept of contributory data is not a new idea within insurance. [There are] examples across various personal and commercial lines of insurance. These initiatives span several markets and, in some cases, have existed for several decades – the noticeable absence is travel.”

According to Naidoo, these similar initiatives have long since demonstrated their value. The US medical information bureau (MIB), for example, has reported a 30 to one dollar return on its misrepresentations and omissions checking service.

Furthermore, the successes in reducing fraud in other areas of the market may be shifting fraudsters’ focus to the seemingly less-well policed travel sector.

“As fraud controls strengthen elsewhere in the market, there is sentiment that travel – with its comparatively limited safeguards – could become an increasingly attractive target for opportunistic fraud,” Naidoo warned.

The benefits of such connected datasets would be twofold – allowing insurers to both close the disclosure gap, as well as more effectively investigate fraud.

Connecting data across a broader population, Naidoo added, can reveal relationships and repeated behaviour that is invisible within any single portfolio. Joining datasets, in theory, can create stronger evidence for risk assessment, investigation and underwriting decisions.

Proof of concept

Naidoo also suggested that a proof of concept already exists in the form of Verisk’s own ClaimSearch database – a large contributory dataset for the US property and casualty market, containing over 1.8 billion records from 2,800 insurer contributors, covering 95% of the market.

According to Naidoo, this level of industry involvement shows that the market sees “sufficient value to contribute at that scale.”

“We should really ask ourselves why travel insurance, with its rich combination of medical, transactional and claims information has not yet developed an equivalent source of market-wide intelligence,” he added.

Alongside the apparent upsides, sharing data at such a large scale also brings inherent risks – a fact which Naidoo feels should not be ignored, but should also not halt progress.

“When it comes to sharing data, insurers tend to raise the same concerns about feasibility, losing competitive edge, data protection and trust. These are legitimate concerns and should not be dismissed, but instead be used as design questions rather than reasons to abandon the opportunity altogether,” he said.

“The question is no longer whether connected travel insurance data could create value, the question is rather – when?”